Market Snapshots and Commentary on Value and Quality of life along the former Main Line of the Pennsylvania Rail Road, up until recently called the R5 Line, and now officially known as the Paoli /Thorndale line. R5Realty runs from Center City Philadelphia through the walkable, Westward outlying Towns & Townships.
Showing posts with label First-Time Home Buyers. Show all posts
Showing posts with label First-Time Home Buyers. Show all posts
In much of Lower Merion, Haverford and Radnor Townships, where we primarily focus our efforts, we estimate that about $200,000 is a typical cost for a small, move-in-ready, starter home on a nice, quiet street. There are of course, exceptions, but $200k is where you start to get some options.
This twin (pictured below ) at 41 Lowrys Lane, near 2 train lines and Villanova University, was just reduced to $200,000, twenty percent less than its previous sale price of $252,000 in 2007. That's a compelling price for the neighborhood, and if the sellers are willing to budge a bit and offer a $10,000 sellers assist toward closing costs, a qualified buyer needs only about $9000 upfront - soup to nuts - to buy this home. Going forward, the total ongoing monthly payment for mortgage/taxes would be about $1425, or about equal to what one would pay if monthly rent for a similar home in the area....
Bottom line: if you have access to about $10,000 either via savings or family gift, and the job/earning security and confidence to make ongoing payments of $1400 month for at least 3 years, it makes sense to consider buying a home in 2013. Talk to a Realtor (we'd like you to call us of course!) about getting pre-approved for a loan. The preappoval process (like talking to any Realtor) is free and without obligation. You may be pleasantly surprised or possibly very disappointed at how the preapproval process goes, depending on your credit history, debt obligations, and income review.
Our point here is not to sell this particular house, or to encourage anyone to buy a home for whom the decision is not sensible. But people frequently wonder what it takes to make the leap from renter to first-time buyer of a small, move-in ready home in these parts, and our bar is about $9000 cash, $1400/month, plus lender acceptable credit and income.
Like this Bobcat after Prey: Begin the hunt in January.
Selling listings is great, but there's something especially fun about working with Buyers. Call it the thrill of the hunt, if you will! Come February, new Listings will start to drip onto the market. By March, more new listings will start to spill, and by April is when they really start to pour forth. All this makes January an ideal time to begin positioning yourself as a buyer ready to pounce on the right new home.
January is an excellent time to start checking out Open Houses and interviewing Real Estate agents (aka Realtors) to help you buy a home. Most Realtors are always happy to engage and connect with new home-shoppers . In January, open house traffic is usually on the lighter side and Realtors (such as us!) often have ample time to chat, share information, and hopefully impress potential clients.
Potential buyers should be advised, there is never any required fee or obligation when meeting/interviewing a Realtor to be your buyer's agent. Without buyers, there is no Real Estate Industry, so you are in the driver's seat. And this is true whether you are a buyer ready to pounce or someone who is just contemplating the possibility of buying a home.
Go to Open Houses this January. Talk to agents and let them do a little audition. See how much the agent you meet seems to know the neighborhoods you are looking for... Give the agent some "homework" and ask him/her to get back to you with information and see how he/she performs ... Make a date to have an agent show you several houses and see what kind of rapport exists or doesn't... Basically, you can test drive Realtors like you would a car. Get on the road, see how it feels, and move on if it doesn't click.
Try this during January and see who seems knowledgeable, eager for your business, and most importantly - competent! From there, next step is to get pre-approved for a loan, so you know how much house you can afford. You may also find that Realtors often work much harder and in more dedicated fashion once you have been pre-approved for a loan. Again, pre-approval is free of charge and free from any future obligation to anyone. But along with choosing a Buyer's Agent, it's an essential first step toward buying a home.
If buying a home in 2013 is in your gameplan, getting a January headstart on selecting and agent and getting pre-approved will put you in the catbird seat and ready to pounce on the right listing when it comes down the pike. It's true we are still in a "buyers market" but our region is not one of desperation for sellers. We saw it in 2012 and expect to see more of it this year -- the Best houses at the Best Values often get snapped up in less than a week by Buyers who begin the process a month or two before everyone else.
We're happy to share more inside tips and chat about the process of buying a home anytime via email or phone 610.348.7972. If nothing else remember this - having a Realtor work hard as your Buyers Agent should never involve any pressure or expense on your part, as it's only sellers who pay commissions. Having you own dedicated Buyers Agent is free and should make the whole process better.
Prices in Havertown/Haverford Township - the next school district over from Penn Wynne and Lower Merion - can run 10-20% less than Lower Merion School District. The schools are quality and the community is solid, though each has somewhat less prestige than Lower Merion. This doesn't mean folks are not enjoying high quality of life, good schools and larger more updated houses for less money. In many cases, its just the designer Lower Merion label and Mainline moniker that one does without. But by the same token, while a Havertown house may cost less going in, the growth for resale will likely follow suit due to erroneous but hard to shake status assumptions versus Lower Merion.
Havertown is a generally stable and mature suburb, with most construction 50+ years old. Neighborhoods are well-settled, knitted, family-oriented.and decidedly residential. With some significant exceptions, such as quaint Brookline, much of Havertown lacks great walkability to shopping, restaurants, attractions. Subdivisions created with the automobile in mind mean most outings involve a short drive; however, the quality Pre-Vietnam era planning pays off with generous backyards and plenty of public park space. It's a good bet you will live within a short walk to a quality park.
Prices Paid for Single Family Homes in Havertown, Pa. During July & August 2012
Every buyer is an entitled to an agent and since Buyer representation is free, why not have an agent in your corner? Before we began as an agents, Heather and I bought our first house - a cute Narberth cottage back in the late 1990s. Nearly everything related to the purchase, the sale, and the decade we resided there was pleasant. Like most folks who bought at the Millennium and then sold before the market imploded in 2008, we were and are still grateful that the cottage obtained a 50% increase in market value during our ownership.
Some things about that first, somewhat nerve-wracking transaction stand out in mind. (1) Shared Driveway. We swore we would never buy a house with a shared driveway based on the cottage experience. Sure enough, in 2009, we did buy a shared driveway twin, but this time we had a pre-existing relationship with our new neighbor, which helps gloss over any rough spots or tight squeezes. But we had no such platonic buffer with our shared driveway back at the cottage. At times, navigating the undivided blacktop was on par with tankers dueling in the Strait of Hormuz. Not fun. In retrospect, a Survey and the addition of an innocuous, paved divider might have helped.
(2) Just because a home inspector has an alliterative name that is synonymous with thoroughness and toughness in these parts, doesn't mean he or she is the person for the job. On reputation and referral I hired a local "name" inspector more suited to 7-figure deals. True to his word, the house held up But not so much the basement retaining wall that showed obvious signs of cracking and fatigue during the inspection. A complete home-buying neophyte at the time, I was gun shy about mentioning my concerns about the wall to the legendary inspector. Several years into ownership, the wall needed costly replacing. No big deal, but if it was obvious to me, how could a seasoned pro overlook a large crumbling wall affixed to a Tiny Cottage? Lessons learned: (a)There are no bad questions during a home inspection. (b) Don't hire a tank to deconstruct an ant hill.
(3) And finally, I learned a bit about Dual Agency - which is when the same Real Estate agent represents both the Buyer and the Seller... Our Agent at the time (our first agent ever), was also the Listing Agent for the Cottage that we purchased. She was the one who brought the cottage to our attention. Now I had once read about extenuating circumstances when One agent represents both Buyer and Seller, so I asked our agent if there was anything unusual about her handling both sides of the deal... She indicated it happens all the time and presented nothing unusual.
Common sense - the kind that should have alerted me to the potential pitfalls of a narrow, shared driveway and a cracked retaining wall, should have also led me to understand that One Person (One Agent), cannot be a confidential advocate for Buyer and Seller at the same time. Ideally, my Realtor would have proactively pointed this out. She was aware we were naive, uncoached, first-time buyers in need of an advocate dedicated to protecting our interests, without the baggage of a pre-existing fiduciary duty to the other side of the deal.
It's possible laws and disclosures were not as stringent in the 1990s as they are in the quasi Post-Apocalyptic world of Real Estate Regs that currently govern agents like myself.. In today's world, Realtors are required to proactively inform consumers about potential conflicts of interests. As it is, I can't say I was overtly harmed by allowing the Sellers' agent to also perform as my Buyers' agent. The deal we made was pretty much win-win, but I would have liked someone in my corner during the negotiations that came up at settlement. If my neutered agent had been on my team and not neutral, perhaps I would have made a few extra bucks.
In the long run, the money was and is is irrelevant. We got the house, enjoyed it, maintained it, and sold it for a good price, but I believe it was a breach of trust and exploitation of my naivete to have been counseled to act without an advocate in my corner.
Bottom Line: There are 3 primary types of Representation available to consumers of real estate services:
1- Seller Agency (Realtor works only on Sellers behalf),
2- Buyer Agency (Realtor works free on Buyers behalf),
3- Dual Agency (Realtor represents both sides in a NEUTRAL fashion) and is the advocate for Nobody so as to avoid conflict of interest.
If both parties are savvy and sophisticated and able to fend for themselves, Dual Agency isn't such a bad thing. Heck, since the agent is making a Double Commission (!), dual agency can be an opportunity for Seller and Buyer to neogitate some money back. But in a situation where either party is counting on someone to actively protect their interests and provide exclusive counsel, Dual Agency is not a good look.
When out home shopping, you can call the Listing Agent on the Lawn sign. Hear what he or she has to say as they may know things about the house other agents don't. But when it comes time to perform serious diligence or make an offer, Buyers are entitled to independent free representation and ought to get it. By the same token, Sellers have a right and interest in seeing their Listing agent does not double dip and dilute efforts on sellers behalf.
There is a Main Line for the rest of Us.
We're talking modest but comfortable 2-3 Bedroom single-family homes in Lower Merion in the $250,000 price range. For buyers with good credit, steady employment history, and as little as about $10,000 down, homes such as these can be purchased with an all-inclusive monthly payment of about $1850 via an FHA loan. This all-inclusive monthly payment is Only about $1350-$1450 for buyers who have approximately $50,000 available for a 20% down payment and conventional loan with the best rate.
The point here is not to tease or tempt anyone to stretch or challenge what is affordable and sensible. But it has come to our attention that many folks prematurely assume that fine Main Line homes and Lower Merion Schools are only for "Richie and Roberta Rich."
Lets look at the following examples of some quality single family Lower Merion homes currently on the market...
328 E. Spring in Ardmore (top right) is a delightful two-bed, 1000sf Cape Cod, with a large gorgeous backyard, off-street parking, and opportunity for expansion. Offered by Ogontz Global Realty at $249,500, this home could be purchased at list price with about $20,000 to cover down payment and closing costs. A sharp buyer's agent - like R5Realty.com's Ted and Heather - could very likely negotiate with the Seller to pay closing costs and reduce your funds needed to purchase down to only about $8500, with a total monthly payment of about $1850.
Duffy's Penn Wynne Carroll Listing: $9000 Down?
Buyers with ability to afford about $50,000 at closing could reduce that monthly payment to only about $1350... These numbers also apply to Duffy Real Estate's $250,000 listing of 1026 Carroll Avenue in Penn Wynne. The Carroll house needs some work but with 3 beds, 2+ baths and nearly 2,000 sq ft., this is a well-priced Lower Merion home for an expanding family.
My favorite currely listed home in the Lower Merion&Main Line's under $300,000 club is Assist2sell's listing at 1243 Bryn Tyddyn in Gladwyne. This fascinating 1700sf bungalow is now offered at $275,000. Conventional buyers with an approx $55,000 down payment can own this retreat with all-inclusive monthly payments of about $1450. If you go the FHA-loan route, which requires less down but more per month, the numbers are $10,000 down and $2000 per month. To get this deal, your Buyer's Agent would need to negotiate for the seller to contribute about $15,000 toward closing costs, which is not an improbable proposition.
Assist2 Sell's Gladwyne Cottage at $275,000
Again, the motive here is not to lure and to tempt folks to look beyond their means, or even to tout these specific listings. But if you have good credit and employment history, as well as about $8,000-10,0000 in down payment money, you too can join Mr. & Mrs. Richie Rich on the Main Line for less than $1500 monthly payment all-inclusive. For more current options in this price range, or to further discuss values, options or Buyers' assistance for these listings and others we welcome your call or email.
HOW MUCH MONEY DO I NEED? Somewhere between $5000 - $50,000 for a Starter Home or moderate Starter Home upgrade in the wonderful communities from Center City to Wayne. We break it down below with headlines linked to extremely helpful, detailed articles from the highly respected source, Bankrate.com.
DOWN PAYMENT- WHAT IS IN YOUR WALLET?
The amount of money you lay down when you buy a house and obtain a loan is called the Down Payment.
You must ascertain this from the get-go a very basic idea of How Much Money you will be able to come up with when you are ready to buy a house. For a very modest 3BR home along the R5 from Center City westward to Wayne, you could find a nice, modest 3BR small house for 250,000.
If you are reading this far and are like most people on Earth, you don't have the means to write a check to buy a house for $250,000. So no matter what sort of house you buy - and you could potentially buy a super little house for $150,000 - you are going to need to get a Loan and Borrow discussed a bit later here.
For pretty much any home along the R5 you will need between 5,000-50,000 to begin the actual purchase process and also an addition 5-10 Thousand on hand to pay for additional Closing Costs.
CLOSING COSTS
Another piece in the Down Payment question is factoring in the Extra money you must have on hand to pay for Closing Costs, which add about $5,000 to $10,000 on to amount of cash need to buy a home in the 150-250k range. Closing costs include charges such as: a transfer tax of about 1-2% that Townships level whenever a home is bought/sold, also pro-rated property/school taxes you have to refund the current owner, and charges related to obtaining your loan.
There are simple ways to help spread out closing costs over time, and in some scenarios you might entice the Seller to give some of his expected profit to help cover some of your closing costs. This is called a Sellers Assist, but for simplicity's sake, when you are figuring out how much cash you have and how much house it can buy, I think having 7500-10,000 in the bank and able to immediately transfer is a Starting Point for when its time to start looking with Intent to Buy. The remainder of the cost of the house can be financed, or obtained via a Loan discussed below.
GETTING THE LOAN AND GIVING THE MORTGAGE
Lots of people talk about Getting a Mortgage.
What you are actually Getting is a Loan from a bank or lender.
In return for them trusting you to pay back the Loan money, you Give a Mortgage to your bank or Lender. The Mortgage you give is the Right for the bank or Lender to Take the house should you not make good on your loan, which you can pay back in monthly installments.
TWO MOST POPULAR LOAN OPTIONS
a) Conventional Loan - where you pay a larger Down Payment but pay more in fees and interest over the life of the loan, usually 30 years.
b) FHA Loan - Where you can put down a much Smaller Amount of Money but pay More in fees and interest over the life of the Loan.
With a CONVENTIONAL LOAN you need a 20% downpayment, meaning you are paying 20% of the cost of the house out-of-pocket on the day you purchase, and your Loan amount is the remaining 80 percent... On a $250,000 house you need to be able to write a check for $50,000 the day the deal goes down and your borrowed amount is $200,000 You now get the best deal on interest and fees for paying your loan back... But what if you cant get $50,000 together, can you still buy the house but with a different type of loan described below.
With an FHA LOAN you need a down payment as little as 5%, which is only $12,500 for the same %250,000 house. Your terms, or your fees and interest to pay back the $237,500 loan will be more expensive than if you had a conventional loan, but usually reasonable enough so as to still make this deal appealing to those with smaller war chests so to speak.
MONTHLY PAYMENTS
Ok, we know how much you need as far as Down Payment and Settlement Costs to buy a 250,000 house . A minimum of $5k-10k cash is my recommended starting point, but the next critical step is making sure that you will be able to afford the Monthly repayment you must make to your lender. Clicking the headline above will take you to a handy mortgage calculator, or you can read on below.
For example: Monthly payment on a $250,000 home -- bought with putting 60k or 20% down for a conventional mortgage and with closing costs-- is about $1350-$1500 per month. That covers your loan payment, taxes, insurance.You need to be able to be ready to prove to a lender that coming up with 1300-1500 per month makes sense within your budget and earning expectations.
Lets say you have less cash available to put down but still want to buy the 250.000 k homes, you could put down only 12-15k to make the deal but your Monthly payment would be higher, maybe 1600-1850 per month. In other words, if you have 10-15k available and the ability to both pay and prove you can pay between 1500-2000 in monthly payments for shelter, then talk to your Realtor about getting Pre-approved for a loan, as having a Pre-approval letter on hand and ready to submit, is a prerequisite in a transaction if you wish to show some respect for the Seller - and you do because that adds value to your offer.
GET PRE-APPROVED or PRE-QUALIFIED
Once you have determined how much cash you have or expect to have on hand, its time to call a friendly Real Estate Agent or Realtor who can help you to decide if now is the time to get Pre-Approved or not. Some of this might include your recent credit history or your expected earning ability to cover monthly payments.
In a Pre-Approval, you give a lender (Realtor will help you find one if you don't have someone in mind) your financial information and the Lender provides a statement letter advising how much you are eligible to borrow. given that everything you advised is correct. You are not in anyway beholden to use the Lender who gave you a pre-approval, but what you seek is a document from the highest caliber and best regarded lender possible, to say they have regarded your sworn financial information and certify you as a qualified candidate to be approved for a loan and a purchase.
A Pre-qualification letter and certification that your viability has been at least preliminarily reviewed, are a door-opener for beginning submitting or negotiating an offer... Your bid cant be regarded seriously until you have shown you can make the effort to get reviewed and backed by a lender. The process can be done over the phone and online, and is quite easy.
NOW YOUR ARE READY TO BE AN ACTIVE HOME-SHOPPER/HOME BUYER
You know how much you have available for a Down payment and you know how much you are eligible to borrow. You can now really go house shopping as you Pre-Qualified, Eligible and Prepared to make an Offer on a house.
Once again, Bankrate.com is an excellent source of information for all things related to How Much Money is Needed to Buy a House.
